Minneapolis will pay you to build a house on the north side

The city is giving $20,000 to anyone willing to buy a vacant lot in north Minneapolis and build their own home. First responders such as police and firefighters, as well as public school teachers, get an additional $5,000.

The goal is to revitalize the north side’s housing stock, which has been depleted due to historic disinvestment, the 2008 foreclosure crisis, and the disastrous tornado of 2011. At the same time, the city hopes to entice prospective homeowners with a rare opportunity to take creative reins over designing their dream homes.

Since applications opened in April, the city has received just one individual. Others, including developers who qualify for up to $75,000 per unit, have expressed interest and are still working on their proposals, says Roxanne Young Kimball of the city’s economic development division.

But building a house from scratch takes some serious consideration. The nearly 200 lots for sale are typically 40 by 125 feet, and range in price from $2,500 to $25,000.

Depending on all sorts of factors including the soil quality, environmental hazards (which the city is washing its hands of), the cost of a general contractor, number of beds, baths, and finishes, the whole thing could cost upwards of $200,000, says Nick Reimler of MyHomeSource, which is constructing some 65 ramblers for the Humboldt Greenway project in Shingle Creek and Lind-Bohanon.

That’s significantly more than average property values in the neighborhoods where the city’s lots are located. According to Zillow, houses in Webber-Camden, Cleveland, Folwell, McKinley, Jordan, Hawthorne, Near North, and Harrison average around $140,000.

Young Kimball also estimates that new construction costs would range anywhere from $180,000 to $250,000, which she acknowledge are greater than the market values.

However, newly constructed homes typically have higher values than the average, and north Minneapolis is both the most affordable place to build in the city as well as one of the fastest growing. From 2014-2016, there’s been a nearly 30 percent increase in home values, she says, and those projections are steadily rising.

The city is also planning to launch a long-term affordability program, which could provide an additional $25,000 cushion. Plus city staff are eager to help.

“Being in the driver’s seat throughout the process is something that gives you the opportunity to build the home you want the most,” Young Kimball says. “There are certainly benefits and risks with the construction of your own home, but for some, the benefit of having total control is just priceless.”